Bright and early this morning, Toll Brothers (NYSE: TOL) reported that its first-quarter loss narrowed thanks to fewer write-downs. The luxury homes giant lost 55 cents per share compared to 61 cents per share a year ago. The quarterly loss misses the Thomson Reuters estimate by 3 pennies. TOL's latest results included write-downs (pre-tax don't you know?) of $156.6 million, compared to $245.5 million last year. Taking the write-downs out of the equation, TOL's quarterly profit hit six cents per share. TOL's quarterly revenue dropped 51% to $409.3 million.

Looking ahead, TOL stated that it won't provide fiscal 2009 guidance thanks to the current market climate. The homebuilder did state expectations that it will deliver somewhere between 2,000 and 3,000 homes in the current year at an average price between $600,000 and $625,000.

Everywhere I go in the suburban wonderland where I live there seems to be a new housing development. When I visited my brother- and sister-in-law in a neighboring town, I must have passed seven of them. Apparently, word of the housing slowdown has not reached Burlington County, New Jersey.

This seems like madness. After all, the housing market is in the tank. Applications for mortgages fell 23% on a seasonally adjusted basis for the week ended September 26, according to data from the Mortgage Bankers Association cited by Reuters. U.S. single-family home prices fell a record 16.3 percent in July from a year earlier, according to the Standard & Poor's/Case-Shiller Home Price Indexes.

Consumer confidence is shaky -- heck, I am not feeling so confident even though I bought a car. Foreclosures are at record levels -- still. Banks are tightening their credit standards, making it difficult for borrowers without sterling credit to get loans or refinance their existing ones. That's what makes the rise in the home builder stocks even more baffling.

Shares of Hovnanian Enterprises Inc. (NYSE: HOV), Toll Brothers Inc. (NYSE: TOL) and Lennar Corp. (NYSE:LEN) all gained double-digit percentages in the third quarter. The reason? Investors are chomping at the bit to call a bottom in the housing market. But I sat that's premature. S&P points out that many metropolitan areas are showing double-digit declines in home values. "There are signs of a slowdown in the rate of decline across the metro areas but no evidence of a bottom," David Blitzer, chairman of S&P's index committee, said in a statement.

So much for the old joke about "no one would buy from him except his family."

Apparently Toll Brothers (NYSE: TOL) can't even get co-founder and vice chairman Bruce E. Toll's daughter to close on the home she agreed to buy from the company.

In a related-party transactions disclosure in the company's most recent proxy statement, Toll told investors that "prior to fiscal 2007, the company entered into an agreement of sale to build and sell a condominium to Wendy Topkis, Bruce E. Toll's daughter, and her husband for a purchase price of $2,468,075. In January 2008, the buyers informed the company that they did not intend to make settlement on the condominium. The company intends to pursue its rights under the agreement of sale."

Will the company go after the vice-chairman's daughter in court? Now, that could lead to some interesting related-party transactions disclosures in future proxy statements.

According (subscription required) to the Wall Street Journal, the company's general counsel said that Toll would not treat Ms. Topkis any different than any other customer. She probably left the company with a sizable down payment to ease the pain, something in the neighborhood of 7%, but Toll can't be too excited about finding another buyer in this market.

So we've heard some pretty dumb excuses for bad corporate performance. Overstock.com (NASDAQ: OSTK) blames it on short sellers and reporters. Blaming the weather is an age-old tactic for retailers.

And then there's Toll Brothers (NYSE: TOL) CEO Robert I. Toll, who knows how to make the housing market get better: The media needs to stop talking about how bad it is.

It's vaguely reminiscent of one of my favorite movies, Spinal Tap. In the best-known scene, Nigel Tufnel explains to an observer that the band's amps go to 11, rather than 10. The incredulous man asks how that really makes them go louder -- they only go to a certain volume, regardless of what number it's labeled.

MOST NOTEWORTHY: Toll Brothers (TOL), COTT Corp (COT), Tim Hortons (THI) and Linktone (LTON) were today's noteworthy downgrades:

• Banc of America downgraded shares of Toll Brothers (NYSE: TOL) to Sell from Neutral, citing expected deterioration in luxury sales due to mortgage distress in the marketplace.

• COTT Corp (NYSE: COT) was cut to Hold from Buy at Stifel, citing the difficult macro environment and continued profit declines.

• Tim Hortons (NYSE: THI) was downgraded to Neutral from Buy at Goldman, citing valuation, and notes that fundamentals remain favorable.

• Montgomery cut Linktone (NASDAQ: LTON) to Hold from Buy, citing the sudden decline in its wireless VAS revenues following Q2 results...

OTHER DOWNGRADES:

• Banc of America downgraded Hovnanian (NYSE: HOV) and Standard Pacific (NYSE: SPF) to Neutral from Buy.
  

• Merrill Lynch cut AutoNation (NYSE: AN) and American Axle (NYSE: AXL) to Sell from Neutral.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).